One of the main topics of discussion this spring at recent industry conferences and during investor calls has been Enterprise Products Partners LP’s announcement last month that it is moving forward with its long-rumored plan to build an ethane export terminal along the Gulf Coast. This project, estimated by industry analysts to cost between $500 million to $1 billion, will have the capacity to export up to 240,000 barrels per day (bbl/d) of ethane when it comes online in third-quarter 2016.

Thus far the Enterprise project is only partially subscribed, but the long-term contracts that have been secured were already sufficient for the company to move forward. The facility will integrate with the company’s Mont Belvieu complex, which includes more than 650,000 bbl/d of fractionation capacity and more than 100,000 bbl/d of NGL storage capacity along with access to Marcellus and Utica ethane via the ATEX pipeline.

The project is seen as a gamble by petrochemical companies, who point out that there is a limited market for ethane in Europe since it is more economical for companies to crack propane, butane and other condensates. Officials at BASF Corp., Dow Chemical Co. and LyondellBassell Industries also questioned if there would be enough specialty marine vessels that could transport liquefied ethane as well as the ability of this project to meet its deadline.

Enterprise officials countered that they have a strong track record of responding to market needs and delivering projects on time and under budget. “We have a high regard for the U.S. petrochemical industry and have been very supportive of their expansions to the extent that we’re willing to put money in projects like the Aegis and ATEX pipeline systems. Frankly, producers need markets,” Jim Teague, the company’s COO, said during a May conference call to discuss first-quarter earnings.

“I know that some people don’t have the same robust forecasts that we do, but invariably, when we sit down with a petrochemical company or with a producing company, by the time we’re through, they have a full understanding of what it is we’re looking at … and become a big believer,” he continued.

The fact that all of the North American processing facilities are currently running negative margins for ethane means that foreign markets and their margins are attractive based on the projected supply levels. Teague added that the company doesn’t believe this terminal will change the market dramatically, but it will serve as a bridge until the North American market can fully absorb these supplies.

Teague acknowledged that in an ideal world, it would be easier to export ethylene resin rather than liquefy ethane for export, but he cited that the current market dynamics require more options. “I would rather have everything this country exports be solid rather than liquid, but that’s not the reality today,” Teague said. The company is planning to secure long-term contracts at 10+ years, which is another indicator on just how long the country will be on ethane in the years ahead.

Teague declined to comment on what markets the company is eyeing for the exports, but said that the Panama Canal will be “helpful.” Interestingly, he said that he views this proposed project closer to a pipeline rather than an LPG export terminal because it would not be dependent on spot market prices. This strategy would see dedicated carriers make regular runs between the terminal and buyers with long-term contracts, with Enterprise collecting a delivery fee as with their pipeline operations.

Although this new project was a large topic of discussion among investors, it is hard to ignore the success that Enterprise has had with LPG exports. Earlier this year, the company announced plans for an expansion of its LPG export terminal that is supported by a 50-year service agreement with Oiltanking for additional dock space and related services.

“When this expansion is completed, which is expected to occur by the end of 2015, we will have an aggregate loading capacity in excess of 16 million bbl per month of low ethane-propane and/or butane, which is twice the capacity that we have today,” Mike Creel, Enterprise CEO, said during the call.

In addition, “traditional” midstream operations such as gas processing and pipelines are still the company’s bread and butter. Its processing segment reported record fee-based volumes of 4.7 billion cubic feet per day in the quarter, which is a 4% improvement from last year’s quarter. Equity NGL production increased 12% over the previous year’s quarter to 137,000 bbl/d. Creel said that the bulk of the fee-based processing volumes were from Enterprise’s South Texas plants with equity NGL production being increased at its Meeker and South Texas plants.

Gross operating margin from its NGL pipelines and storage segment rose by 25%, or $58 million, to $290 million in the quarter. The ATEX pipeline, which began operations in January, was a particular standout in the segment with $31 million in gross operating margin in the quarter. This was despite the pipeline averaging 30,000 bbl/d, 68,000 bbl/d below committed volumes, due to unplanned fractionation facility outages in the Marcellus Shale along with several still being under construction or in the process of connecting to the pipeline.

For the quarter, the company completed $2.5 billion of capital projects, including the ATEX pipeline, the Front Range pipeline, and its Mid-America pipeline expansion. “Those collectively have resulted in about 1,100 miles of new pipeline being placed into service. We have another $2.5 billion of capital projects targeted for completion this year, and $4.2 billion planned to begin service in 2015 and 2016,” Creel said while noting there are several other projects in its backlog that are being worked on.